Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter 2014 Results Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. And I will now turn the conference over to your host, President and CEO, Mr. Ed Christian. Please go ahead, sir. .

Keely, thank you very much, and welcome to our Q1 conference call. I asked Sam for a change if I could read the SEC language. So with that said, you go for it. Okay. .

This call will contain forward-looking statements about our future performance and results of operations that involve risks and uncertainties that are described in the Risk Factors section of our most recent Form 10-K. This call will also contain a discussion of certain non-GAAP financial measures.

Reconciliation for all the non-GAAP financial measures to the most directly comparable GAAP measure are attached in the selected financial data table..

For the quarter, net revenues increased 1.6%. Station operating expense increased $859,000 for the quarter, with $482,000 of the increase being due to health care cost. Exclusive of the increase in health care cost, station operating expenses would have been up 1.7% for the quarter.

I expect that we will see a 1.5% to 2% as an ongoing station operating expense increase for 2014..

Free cash flow for the quarter was $3.4 million. And we anticipate free cash flow for the year of between $21 million and $23 million. National revenue accounted for approximately 13.1% of gross revenue for the quarter, compared to 11.6% for the same period last year. Our total outstanding debt is $46.1 million.

Cash on hand at the end of the quarter was $23.3 million. We continue to look uses for our free cash flow, including acquisitions, dividends, stock buybacks and continuing investment in the company..

Retrans revenue was $621,000 in the quarter for our 2 CV [ph] markets, up from $537,000 last year. Retrans payments to the networks were $165,000 in the quarter, compared to $150,000 last year. Interest expense for the quarter declined to $272,000 from $358,000 last year.

Capital expenditures were $1.5 million for the quarter, compared to $1.2 million last year. And we currently expect our CapEx for 2014 to be around $5.5 million..

Ed will discuss how second quarter pacings are going here in a couple of minutes. We expect interest expense for 2014 to be between $1.1 million and $1.4 million, given the existing interest rate environment. And our anticipated total tax rate going forward will be between 40% and 41%.

We anticipate deferred taxes for 2014 to be between $2.7 million and $3 million..

Ed and I will respond to those questions that were sent in that we feel appropriate to respond to in a couple of minutes. In the meantime, I'm going to turn it back over to Ed for more comments. .

So, I have a question.

What was the first sentence you read? Yes, in the thing there, what was that?.

During the quarter, net revenues increased 1... .

No, no, no, before that, the beginning sentence. .

Oh, this call will contain forward-looking statements about our future performance and results of operations that involve risks and uncertainties that are described... .

So be careful with your answer.

Do you consider me a risk and uncertainty?.

No. .

I just want to make sure. You've been telling me that for all these years. And I'm not sure, when I hear that, it suddenly occurred to me that, that was it. Thanks, Sam..

Listen, I'm going to save all of you a lot of time and the sheer tedium of rehashing Q1 and its problems that are all weather-related. You heard this ad nauseam on repeated calls from the other broadcast companies. And you really don't need to hear from us the number of days that our sales executives made angels in the snow at the studios.

And essence, you know what it is. In short, we did well in comparison. I think that's the salient point I want you to take away with today. The one-off in the -- in this is the flip of $500,000 in insurance. So with that, I would like Sam to kind of jump back in here for a second because we need just to kind of clarify this. .

Yes, and one of the questions we did have from Marci Ryvicker and John Huff at Wells Fargo was whether we consider the health insurance costs that we saw this quarter as recurring or not? And I would answer that, that I would not say they are recurring. We are self-insured, which saves us quite a bit of money.

Unfortunately, it also doesn't allow the quarter-to-quarter predictability we would like. We'll always have some quarters that are up. We'll also always have some quarters that are down. Being self-insured has proven to be a good way to keep our health care costs as reasonable as they can be, particularly in today's environment.

And while we continue to see some fluctuations, our cost per employee is well below the alternative of paying health care premiums. As you know, Ed, we're always looking at ways to be more efficient in all of our expenses, whether it's health care or anything else. And health care certainly has proven to be a challenge.

But again, we will have quarters where we do better because the fluctuations in when we see the premiums -- we see the cost, primarily because of we are self-insured. .

We've -- we have run the comps on our insurance program versus other companies in this sector. And there's no question we could do -- could shave a lot of costs over that. But we believe that that's one of the benefits that attracts people to the company. With that said, we're with Blue Cross Blue Shield.

We're going out and rebidding it to United this year, United Healthcare, and we'll see where we go. Certainly, this is a cost factor that's on everybody's mind. It certainly is one of ours.

And we discuss it quite frequently as to what we can do without depriving employees of earned income to pay for their health care benefits, and still providing good coverage. So well, monitor to that, we'll report back to the quarter-by-quarter..

Let me talk to you about Q2, which we're in right now. I wish I could say that April showers brings me flowers, but the truth is that Q2 is turning out to be kind of a late bloomer. It is day-by-day sales to bring in the quarter. And let me give you an example on April..

As I've said in many, many times in this call, if you listen to or if you hear what we're saying about pacings, they usually track with every other company in this sector. So we're not the standalone. We're not the ones guilty of aberrant behavior.

But Steve was in -- Steve Goldstein, our Executive Vice President and Group Program Director, was in -- Group Brand Manager, I get to watch my new nomenclature -- was in New York last week at a [indiscernible] sponsored symposium on a Nielsen presentation. And there were a lot of group heads there.

And Steve was talking with one, who's in the private sector of broadcast groups and runs some tremendously, highly revenued broadcast properties. And he said, "How was your April?" And the answer is, "We brought it in just, and it all came in the last few days." And that's what we're seeing.

So it's not us, but it's also people in the top 10 markets are running this whole thing..

We're facing daily rushes of business. Now I guess, this is good because of revenues that are growing. But this last minute buying is, indeed, really perplexing. And I've been thinking a lot about it, as to what the causal factors are on this. And it's kind of like our clients are saying, "Look, it's good right now.

So let's get out there and advertise," which I am pleased to see that they do. I think that, that's a good sign that we're still seeing that. But if I were to tell you that Q2 is shaping up as a knock the cover off the ball quarter, I would be disingenuous. And I think that you'll find that from many other group..

In brief, excluding political, I anticipate Q2 to be sluggish. However, with that said, we're still quite profitable. And as Sam said, we have about $23 million cash on hand and it continues to build. We are looking at acquisitions, but as you know, we are a very disciplined buyer in the market.

And bulls to market and the price has to be -- to fit our matrix..

Buying for the sake of buying has many perils. And if you look at the history of our industry over the last 8 years, you can look at the groups that went out to mass accumulate swaps of radio stations or TV stations. And look at what happened to them during this period. And that's why we look at it.

As I said, we have a couple of things near the pipeline, but our pipeline is a smallish pipeline in terms of being able to get through it, and small in terms of our criteria. .

We have things that we know will work for us and have done so.

We also know that to try to buy a group, a big group of radio stations, to try and to assimilate the culture of another company, to try and to assimilate the sellers, to try and get our arms around the management and everything else like that, can really be off-putting in terms of startup time and energy.

So we look at smallish acquisitions as we have, since we started the company some 28 years ago..

Let's go into some company news. One of the things that we've talked about on this call before is our Metro signals. And I can't understate really where we feel the potential is on the Metro signals for the future. And to give an idea, just recently, in the last few months, here are some of the things that we've done.

To enhance, not only our core competency and our core radio stations, but to also launch new and independent formats in the end markets that we serve. In Portland, Maine, for instance, a week from yesterday, or next Monday, we will be launching an FM companion to our historic WGAN 560 news talk, which will then give us an AM/FM in Portland..

In Clarksville and Jonesboro, that's great, too many villes and too many boros. In Clarksville and Jonesboro, we've launched 2 metro signals that our Christian contemporary music, which is very applicable for the markets that we're in. We are ready to power up a new station in Des Moines.

We are down to 2 formats, doing research as to which one has the most potential for us in the marketplace. Soon, we'll be launching a sports talk companion to our WISC in Asheville, which gives us another element there..

We've launched an FM for a news talk WKVT in Brattleboro and the new stronger signal for our news talk WKBK in Keene, New Hampshire. Additionally, we've launched the CBS Sports affiliated FM in Ithaca, which complements everything else that we do there. We also have about 3 or 4 more teed up in the pipeline waiting for regulatory approval to go ahead.

I never counted the number of metro signals we have. But I would imagine, and Sam, maybe you can tell me, but it's probably close to 40, 30 plus, I know. .

Yes, I don't have an exact count here, but it would be 35, 36 maybe. .

And then we still have the other ones that were in the pipeline. So that's something that I ask you all to watch as we develop them. And we could sit here and talk about our digital efforts and our interactive efforts and all of those. But the fact is that we are in -- we don't dismiss those. And we have a lot of initiatives going on in there.

But the core basis for our revenue is in radio and television. It's on-air. We're also online. We're also on-site. And then we have all that awareness, but that's just something I wanted to bring you up to speed on. .

I just counted them real quick, Ed. It's 37 that we're currently operating or will be on air operating very, very shortly. With another 5 in the pipeline of some state to build. .

Okay. So it's over 40? Wow. .

Yes. .

Makes us one of the largest ones, next to Christian broadcasters. Not as in my name, but as in the format. I wanted to do something here. Research is so terribly important in terms of qualitative research. And when I see some of the really rolling an [ph] exemplary job, I think it's important then. The Southern California Broadcasting Association.

Now we have no stations in Southern California, but under the direction of Tom Callahan, who is their relatively new Executive Director, has done a marvelous job in building reasons for radio advertising, especially in dealer groups and in automotive marketing.

And I think that if we could all, as an industry, get on the same page that Thomas, pushing his association, and radio would be in a much better state. And if any of you would like to look at the research they're doing out there, it's scba.com, but he has done a marvelous job. And I think this is just the beginning.

And if everybody can embrace this and really preach the advantage of or the goodness and the abilities of radio to market and gain top of mind and top of voice..

With that said, I would ask anybody here, who is on this call, to go to nyt.com and search for an article that was in Sunday's paper called, "The Great Unwatched." It's The Great Unwatched. It's all about online video and what really occurs. Now radio and TV might have some problems, but we are certainly saintly compared to online video.

So that's something there..

One final quick comment on TV joint -- JSAs and SSAs. I find it interesting that the NAB has put a time clock on Chairman Wheeler at the NAB, and with 7 days and counting on this to get some relief for this. I'm buoyed by this. I know it's probably driven by Sinclair and Nexstar, which have probably about 1/3 of their portfolio in JSA and SSA stations.

Nevertheless, the commission erred on this one, which is premature, and I think we will bring it back into normalcy. As you know, we have a couple that we share in our markets. But I am not concerned, there is a way that should just to be handled.

And I think that there's enough pressure on the FCC to revisit it and be measured and decent in their application of this..

Sam, I think we might have some questions, do we?.

We do have a few. You touched on it already. you talked about -- one of the question was, "It seems like M&A was your biggest free cash flow priority from the last call. Do you have anything in the pipeline?" And you talked about that a little bit. Is there anything else you want to add to that?".

No. Again, we have 4 ways of -- 4 or 5, I'm not sure -- and that is through dividends, which we have shown in the last 2 years now that we can do a special dividend. We can do ongoing dividends. We can do stock buybacks. Our stock rebounded nicely today, up from what I was concerned about last week.

And that would take a whole conference call to talk about how the market responds to smaller cap stocks. But we have acquisitions. We have the dividends. We have the stock buybacks, and we can pay down debt. And all of those are options. We're certainly not going to get to a point where we're debt-free. I don't see that as a prudent news of money.

But I -- I like the fact that we are probably the most conservatively levered broadcast company. In fact, aren't we? Or is there somebody else close to us? I think there were somebody else. .

Yes, if you look at the very, very large companies, somebody like a CBS or whatever. But beyond that, we're comparing -- comparable to our peers we're as... .

In -- as radio companies. .

Yes, about as low as it goes. .

Okay. Next question you might have. .

The other -- the last 2 questions are both about the same thing. I'll just combine them. "You mentioned on your last call the political for 2014 would be around $4 million to $6 million. Do we have any updates on that?" And then it goes on to ask, "Can we break out the political for radio and TV in Q1?".

I think Q1 was about 250,000. .

Yes, $271,000 in total political versus $62,000 first quarter last year. TV was $60,000 this year versus $1,000 last year. Radio was $211,000 political this year versus $61,000 last year. And I would say our expectations are still for $4 million to $6 million in political for the year. .

CapEx, we look for the same set, about $5.5 million. That's our normal run rate. You have to feed these puppies and make sure that your transmitters and STLs and your antennas, your boards and your generators are in great shape because the only thing you have to offer is the product that is generated by your technical capacity.

And if you overlook that or you skip on that or you wait too long on that, the consequences are pretty dire. So we have no problem in looking at everybody saying that we spent $5 million to $6 million a year in CapEx. In fact, during the digital conversion, we were up like at $8 million, I think. .

Yes. .

Yes.

So have we covered most of this?.

That's it. .

Keely, are you there? Okay, it's your turn now. .

And are you through with your presentation?.

Yes, we are. .

That's why it's your turn. .

Okay, then, ladies and gentlemen, that does conclude your conference call for today. Thank you for your participation and for using AT&T Teleconference. You may now disconnect..